TITLE:
Study on the Evaluation of the Subsidized Fertilizer Distribution System
AUTHORS:
Nahry Yusuf, Sutanto Soehodho, Triana Susanti
KEYWORDS:
Cost Efficiency; Distribution; Subsidized Fertilizer
JOURNAL NAME:
Journal of Transportation Technologies,
Vol.4 No.1,
January
26,
2014
ABSTRACT: In order to ensure the
delivery of the subsidized fertilizer to the farmer in “6 precision-goals”, i.e., quantity precision, type precision,
time precision, place precision, quality precision and price precision in
accordance to regulated Highest Retail Sale Price, the government has regulated
the distribution system of subsidized fertilizer from the plant to the farmers
by form of regulation issued by Indonesian Ministry of Trading. The purpose of this research is to evaluate the existing distribution system of subsidized
fertilizer which is managed by one of the Public Service Obligation State-Owned
Companies (PSO-SOC).
The evaluation is carried out by comparing the cost of the existing
distribution system with the proposed distribution system. Cost optimization of the proposed
system makes use of Mixed Integer Linier Programing (MILP).
Optimization is performed by restructuring the cluster and distribution warehouse,
allowing through trips from plant directly to distributor’s warehouse, and
skipping the producer’s warehouse storing. The proposed cluster
restructuring can reduce the existing cost to 94% - 98%, while through trips can
reduce the total cost to 61% - 72%. In case where through trips is allowed and
producer’s warehouse is in operation and functioned as a buffer, the total cost
is reduced to 64% - 78% from the existing cost. Based on the optimization
result, it is concluded that the existing subsidized fertilizer
distribution system could be improved by allowing through trips, while existing
producer’s warehouse is still in operation as the buffer warehouse to ensure that the
minimum stock is fulfilled. It is noted, however, that this system requires adequate information technology concurrently.